Since launching this website, we’ve made it a priority to review most of the large cryptocurrency exchanges, including Coinbase, Kraken, Binance, and Cex.io. Today we’ll expand our review category by taking a look at another large player in the exchange game with our Bitfinex review. Let’s jump right in.
Bitfinex Review: An Introduction
When I first signed up for Bitfinex and logged into my account for the first time, I experienced a mix of emotions. The platform is complicated. The platform is bulky. But there’s something that makes the platform beautiful.
After logging into your account, which I admit I did for the first time so I could write an unbiased Bitfinex review, you’ll notice how complicated and institutional-looking your user account actually is. Unlike Coinbase or even Kraken, the Hong-Kong-based company’s interface looks like something a trader on Wall Street would use.
After taking a look around my account, I realized that I wasn’t in Kansas anymore, and I was logged into one of the most robust tools for trading cryptocurrency currently available to users.
The amount of features is somewhat overwhelming, which makes you very quickly understand why Bitfinex has been able to establish itself as the largest Bitcoin exchange in the world in terms of volume.
Seriously, take a look at the chart below. Bitfinex consistently moves well over twice the volume of Bitcoin than it’s nearest competitor.
Once you get a handle on the platform however, there’s almost nothing that’s off limits. Whether it’s margin trading you’re looking for, a unique digital currency pair, or various types of trade types, you’re sure to find it here.
Bitfinex currently supports trading for many of the most well-known tokens, as well as a handful of lesser-known ones.
There are plenty of trading pairs, allowing for multiple types of trades in many different markets.
Digital currencies that Bitfinex supports:
|iExec||Ripio Credit Network||Augur|
|Time New Bank||Decentraland||SpankChain|
|FunFair||Basic Attention Token||0x|
|Metaverse ETP||NEO||Bitcoin Cash|
|Chain Split Tokens – Segwit2x||Chain Split Tokens – Bitcoin Unlimited||OmiseGO|
|Ripple||IOTA||Recovery Right Token|
In addition to the coins listed above, Bitfinex has pioneered what they call Chain Split Tokens, or CSTs for short.
By the exchange’s own definition, “The first such product of its kind, CSTs allows Bitfinex customers to speculate on the value of incompatible ledger units associated with a potential forking events on cryptocurrency blockchains.”
I can’t say that I would personally jump on board to invest in a CST, but there’s plenty of users out there who would. More power to you.
The Pros of Bitfinex
- High liquidity limits and relatively low fees.
- Anonymity is apparently possible on this exchange.
- Solid mobile app that’s jam-packed with features.
- Robust security features available to customers.
The Cons of Bitfinex
- Minimum account equity required for trading. When I signed up I was told this was $10,000.
- Users can only deposit cryptocurrency. Fiat deposits are not currently supported.
- Individual United States citizens cannot trade on the platform. However, corporate accounts with proper documentation can.
- The exchange has been successfully hacked before (2016).
Types of Trading Available
Since Bitfinex is one of the world’s most advanced platforms for trading cryptocurrency, there are a wide variety of trading types at the fingertips of customers.
The bulk of these services fall into into three categories, each offering their own unique advantage.
Exchange trading makes up the majority of user activities for both individual and corporate Bitfinex accounts. This service allows customers to fund, trade, and withdraw tokens from their accounts.
There are many different types of orders that can be placed, including limit, market, stop, stop-limit, trailing stop, fill/kill, and scaled orders. In addition, order options inlcude one cancels other (oco), hidden, and post-only limit options.
Watch: here’s what it’s like to place a trade on the Bitfinex exchange.
Another draw to this platform is the Bitfinex margin trading that is offered to customers.
Traders looking to maximize the upside on their trades, if they meet the requirements for this type of trading, are allowed to use leverage up to 3.3X. With leverage, you can open a short position or a leveraged long position. This requires customers to have at least 30% equity in their margin wallet before they can make a trade.
The fees on this service are pretty high, but what do you expect when gambling with somebody else’s money.
The Bitfinex blog has a great guide to trading within this type of account. Check it out: Intro to Margin Trading
If margin trading isn’t enough, Bitfinex also allows users to lend money to other users to trade on margin. I can’t say I’ve seen this before, which makes it a unique feature for customers that don’t mind additional risk.
In summary, you can lend another customer money who wants to use leveraged trading. In return, you’ll receive interest on their coins.
Bitfinex Fees And Liquidity
Bitfinex fees are pretty affordable in comparison to other exchanges. Fees are incurred when you execute a trade (buying or selling), make a withdrawal from the exchange, or fund your account on margin.
Fees applied to trades are calculated depending on the type and size of order you place. The two factors that determine what this fee will be are 1) whether you are a maker or taker and 2) your 30 day trading volume.
- Maker fees: these are paid when a limit order is placed that is under the “buy”, or over the “sell” ticker price.
- Taker fees: these are paid when a user removes liquidity from the Bitfinex book. Essentially, this is taken from any order placed on Bitfinex.
These are general trade amount that apply to orders placed on the public books. If you are placing trades worth over $100,000, they also offer fee-free trading on OTC.
OTC refers to Bitfinex’s Over The Counter Trading Desk. Without going too far down the rabbit hole on this, the OTC allows traders to initiate large trades with other traders without the trade hitting the public books.
These trades open the door to cryptocurrency liquidity that doesn’t change the market price on the exchange. An example would be a whale wanting to unload a position without sending panic through the market.
As for deposits, most transactions are free but fees apply if you make a small deposit (under $1,000 USD), fund an account with a wire transfer (0.100% fee) or make a mistake when sending funds to your account ($150 USD – for Bitfinex staff to track down and hopefully recover deposit).
Lastly, if you’re trading on margin prepare to get hosed. Bitfinex takes a very hefty chunk of the profits made on house money. Do not forget to factor in these fees if you’re trading using margin.
For more information about the Bitfinex fee schedule, check out the fee information page on their official website.
Is Bitfinex Safe?
Understandably, the first question that everyone wants to know (and should know) when looking into an exchange is how safe their money will be once deposited.
Is Bitfinex safe? If you discount the problems the exchange has had in it’s short history, we think so.
First, let’s talk about the exchange’s past issues, then dive into how they’ve stepped up security since.
The Bitfinex Hack
August 2016 was a bad month for cryptocurrency holders worldwide. The Bitfinex hack was announced on August 2, 2016 and the hackers made off with 120,000 Bitcoins, which was worth over $72 million at the time of the hack. Apart from the Mt. Gox hack, this attack was the second largest hack in cryptocurrency history.
— Chris Ellis (@MrChrisEllis) August 2, 2016
As a result of the hack, the exchange lost many of it’s customers. As the price of Bitcoin tumbled after the news of the hack, the exchange remained offline for a good amount of time.
Eventually, a plan was rolled out to repay customers and restore the faith among traders. Unlike Mt. Gox, Bitfinex did everything in their power to make it’s customers whole.
Not only did they give out BFX tokens (which turned into somewhat of a Ponzi scheme without them realizing it), but they also issued bounties on the hackers, all while navigating the PR nightmare and keeping users updated and informed.
Long story short: I could go into much greater detail about this, but I need to finish my Bitfinex review. To summarize, here’s a video that explains the hack and how the exchange repaid their customers afterwards:
Bitfinex took their 2016 hack to heart, and after making efforts to repay customers as much as they could, the exchange made a huge push to implement a trove of security features to ensure the safety of customer funds and data.
While the company can’t disclosure every detail of their security, here’s a few things we know.
When a user signs up for Bitfinex, there’s quite a few unseen security features baked into their platform. However, there’s still many additional security precautions that users can individually control.
What’s cool about these security features is that instead of looking them up yourself, navigating to the Security Tab within your user account will show what is recommended, as well as a progress bar that indicates how secure your account is.
Many of the recommended security features that users should enable are very common and easy to implement. A few of the most common ones are two-factor authentication, locking withdrawal addresses, encrypting email, tweaking session settings, and much more.
One thing that really stood out to me was that every time I log in from a new device, I get an email that informs me of the login. If I get that email and it wasn’t me who logged in, I can immediately contact support and freeze my account.
Bitfinex security is taken even further in almost every sense of the topic. For example, the exchange holds very little tokens online to maintain trades and daily operations. The rest are held in cold storage, offline, and require multiple levels of signoff before they can be accessed.
In addition, Bitfinex security includes:
- Servers that are constantly updated to mitigate the risk of another hack.
- Daily database backups, meaning if something did happen the exchange could be restored.
- Redundant backups of data, spread out over multiple locations.
- DDOS mitigation and protection, allowing the exchange to stay online under heavy loads and attacks.
Visit bitfinex.com/legal/security_policy for more details on how seriously this company takes security.
My Thoughts On Bitfinex
Overall, I think Bitfinex is a great trading platform that’s packed with pretty much every feature someone buying and selling cryptocurrency could possibly need.
When I was looking around my account I have to admit, I got a little overwhelmed with the layout and variety of options in front of me, and I consider myself to be fairly good with technology. The level of sophistication is an upside for some, and a downside for others.
If you’re a beginner who is looking to get your feet wet buying a few coins, I would suggest a simpler exchange like Coinbase. If you’re an intermediate trader, I would suggest Kraken. But if you’re an advanced trader that needs a robust platform with pretty much every feature you can think of, then as our Bitfinex review has outlined, look no further.
In my opinion, the biggest downside with this exchange is that individual users in the United States that have not opened and submitted verification for a corporate account are not allowed to trade on this exchange.
I opened an account and tried, and was promptly reminded of this fact virtually anywhere I clicked.
I know that there’s plenty of other users outside the United States looking for exchanges, and if you fall into that category, then trade away. But if you’re inside the United States, check out the rest of our reviews to find one that suits you best.
Alternatives To Consider
- Kraken: a platform geared towards intermediate traders. Decent amount of digital currency pairs and multiple trading options.
- Cex.io: this exchange is known for reliablity, strong security, and competitive commissions. A great alternative to the advanced features Bitfinex offers.
- Binance: users looking for high liquidity and advanced data (especially charts) to trade the most popular coins should check out this reliable alternative.
- Coinbase: still a beginner? That’s okay! Coinbase the first place you should start to cut your teeth trading cryptocurrency.
Where is Bitfinex located?
Bitfinex, the exchange owned by iFinex Inc, is based in Hong Kong. However, the servers that operate the exchange are spread out all over the globe due to the cloud-based way the platform works.
What do I need to know about Bitfinex verification?
- The Bitfinex verification process for new users can take up to 5 weeks to complete. This can oftentimes be much longer when there is a flood of new users creating accounts and requesting verification.
- If your account has not been verified, you can still place trades, deposit, and withdraw cryptocurrency. However, if you want to deposit and withdraw fiat currencies, verification is required.
- You may be required to submit a form of identification or additional documents to complete the verification. To speed up the process, give customer support what they request and be as thorough in your requests and responses as possible.
Is Bitfinex regulated?
After the Bitfinex hack, the exchange ran into multiple regulatory problems from various entities in the United States. These included the U.S. Securities Exchange Commission and the Commodity Futures Trading Commission.
Rather than potentially comply with strict regulations, Bitfinex made the choice to shut down individual trading accounts for customers in the U.S. The exchange stopped accepting these new accounts, and gave existing users 90 days to transfer funds out of and shut down their accounts.
Bitfinex has not applied for a Bitlicense in the past, and by the looks of it, is not going to do so in the future.