Bibin Wilson, Author at cryptotechies

Cryptocurrency has been a topic of hot debate over the past few months. The value of the two most popular cryptocurrencies, Bitcoin and Ethereum, have seen an unreal surge in value over the past one year, making people pay far more attention to them than before. If you are someone who just got on the bandwagon and are looking to invest in cryptocurrencies using best cryptocurrency exchanges, then you definitely must do a bit of research.

One of the main things you have to research about is the different cryptocurrency exchanges to find out the best one. This article hopes to make that job easier for you. But before you delve further into the article, it is essential to know what a cryptocurrency exchange is.

Cryptocurrency Exchange – What is it?

A cryptocurrency exchange is not dissimilar to a fiat money exchange. Like fiat money exchanges, the ones for cryptocurrency are places where you can buy, sell and exchange cryptocurrency using traditional fiat money.

Types of Cryptocurrency Exchanges

Cryptocurrency exchanges are of different kinds like fiat money exchanges are. It is crucial to understand the difference between each of these exchanges.

Traditional Exchanges: – These cryptocurrency exchanges are more or less like their fiat money counterparts. They are a platform for buyers and sellers to trade bitcoins based on the current market value. Such trading platforms charge a nominal fee while other let you trade for free.

Direct Trading Exchanges: – In such exchanges, the trading happens peer to peer. And so there is no fixed price based on market value, but the parties involved themselves set the prices.

Brokers: – These are online services that let users buy and sell bitcoins at a price set by themselves. They usually charge a small fee for every transaction.

Funds: – Cryptocurrency funds are like pools of crypto assets which allows the public to trade cryptocurrencies using the fund money.

Best cryptocurrency exchanges

The following are the top ten best cryptocurrency exchanges in the world. This list was put together after factoring in various data like their reputation, the fees they charge, their verification processes, geographical restrictions, etc.

Coinbase

It is the most popular cryptocurrency exchange in the world with a great user interface. Trusted by many prominent investors, this platform allows users to buy, trade, use and store multiple cryptocurrencies. Ethereum, Bitcoin, and Litecoin can all be purchased using various fiat currencies such as the US Dollar, Pound, Euro, etc.

Buying and Selling are allowed only in few countries. However, you can use their wallets for storing and transacting Bitcoin, Ethereum Litecoin, and Bitcoin cash. Coinbase is my favorite and I personally use it.

Coinbase can be accessed from anywhere in the world using your mobile device. Users can also trade cryptocurrencies with other people from around the world using GDAX, a subsidiary of Coinbase. Transferring your digital money from Coinbase to GDAX is free of cost thus enabling you to trade your cryptocurrency anytime, anywhere.

Takeaway: If you purchase cryptos for $100 from Coinbase, you will get $10 worth of bitcoin. Claim your $10 free bitcoins now

Cex.io

Cex.io is a platform that supports the exchange of both Crypto to Fiat money and Fiat to Crypto money. You can buy bitcoins using a credit card from this platform. It supports the trading most of the most popular cryptocurrencies in the world at present. Cex.io is a great platform for both beginners and experienced professionals.

Beginners can avail the brokerage service, where seasoned cryptocurrency experts advise how to invest your money in crypto money. At the same time, experienced professionals can make use of the different trading features such as marginal trading, and personalized trading dashboards.

You can withdraw your money as USD or to the supported cryptocurrency wallets. I use CEX for bitcoin transactions through credit card. It offers a great user experience with an easy to use UI.

Poloniex

Poloniex is quite a new company. It was founded in the year 2014, and it has since gone on to become one of the leading trading platforms for bitcoins. Poloniex is an excellent platform for both beginners and advanced traders. It is user-friendly and charges very little money for trades made through the service. The best thing about Poloniex is its high trading volume; it means that you can always buy or sell cryptocurrencies at a rate that is desirable to you.

CoinMama

CoinMama is a brokering platform that has been around for a long time. Users can buy Bitcoin or Ether using credit cards, cash or even money transfers via the Western Union or MoneyGram. The website cannot be used to sell bitcoins or Ether but can be only used to buy them. The exchange rates are fair, and it has a user-friendly interface. CoinMama is currently available in some different countries in both English and their local language.

Kraken

Kraken is an exchange that is mainly used to buy, sell or exchange Bitcoin for fiat currency. No other cryptocurrency can be traded via Kraken. It is the reason why it is one of the largest Bitcoin exchanges by volume of transactions made. Kraken also lets you trade other cryptocurrencies such as Ethereum, Ethereum Classic, Monero, Dogecoin, Zcash, Litecoin, Augur REP Tokens, Stellar and Ripple. You can exchange these cryptocurrencies for normal fiat currencies such as US dollars, Pound, Yen, etc. depending on your geographical location. Kraken is a really good platform for experienced traders as it has a lot of different trading features like margin trading. Also, the exchange rates are always good and the transaction fee minimal.

ShapeShift

ShapeShift allows the trading of some different cryptocurrencies such as Bitcoin, Ethereum, Zcash, Monero, Dogecoin, etc. ShapeShift does not support the exchange of cryptocurrency for fiat money. In fact, you can only buy, sell or trade one cryptocurrency for the other. It is an effective medium for those people who just want to convert their existing cryptocurrency to another one. It is ultra fast and requires little or no verification.

Bitsquare

Bitsquare is not a traditional Bitcoin exchange, rather it is a peer to peer exchange. Bitsquare allows users to buy or sell Bitcoins for fiat money and other cryptocurrencies. Some call Bitsquare as the ultimate Bitcoin exchange as it follows the essence of the Bitcoin technology by being completely decentralized. There is no centralized authority here, and all exchanges take place directly between the buyer and the seller. This is a good platform for advanced traders as they can negotiate prices with their peers, unlike other platforms where the rate is fixed based on the market price.

Gemini

This is a company founded by the famous Winklevoss twins, Tyler and Cameron. They have been supporters Bitcoins for a long time and quite famously bought 1% of all bitcoins in the market a few years ago. Gemini is a fully licensed US Bitcoin and Ethereum exchange; this means that Gemini has to follow all the regulations that a normal bank has to follow. It is one of the reasons why it is highly trusted by its users. Both deposits and withdrawals are free of charge on this platform. The only drawback of Gemini is that it is only available in a select few countries apart from the United States.

Bitstamp

Bitstamp is based in the European Union that was founded way back in the year 2011 when most cryptocurrencies were only in their nascent stages. Bitstamp is especially popular among cryptocurrency traders for the high level of security it provides. The security features include a two-step verification process, cold storage for all deposits that are completely insured and a Multisig technology for its wallets service. The opening of an account is free, but the deposit fee is quite high compared to most other cryptocurrency exchanges. Bitstamp also provides 27/7 support for its users making it one of the most user-friendly exchanges around.

LocalBitcoin

LocalBitcoin is another peer to peer Bitcoin exchange that connects traders from some different countries around the world. The platform is completely decentralized is one of the few Bitcoin exchange platforms that allow payment outside of the service. You can pay cash, or deposit it in banks or even pay through PayPal. LocalBitcoin uses a rating platform to provide security to users. Traders are rated by other peers based on their dependability and other past activities. The website also has a support team that is always ready to help in settling conflicts between buyers and sellers.

The last few years have seen Bitcoin and blockchain technology taking the world by storm, when an obscure, rootless technology popping out of nowhere began making news, being touted as the ultimate emancipator of humanity from paper money and a harbinger of the coming Type I civilization stage.

Hold right there!! For all the cryptocurrencies that we know, they have rightfully evoked the inner skeptic within many of us, mainly because of two reasons. First, that the digital currencies are not backed by gold or any physical commodity or a legal precedent like stocks/shares etc.; and second, that the complex process to generate cryptocurrencies seems volatile and does not fit the current understanding of ‘creating value’ to back up a natural currency.

Blockchain Technology Explained

Let us take a look at how cryptocurrencies are generated through Blockchain technology.

Blockchain, the Mother of Cryptocurrencies:

Let us begin with the concept of a ledger. You must have heard of a ledger, a book where a bank or an accountancy department maintains its transaction data. For those who haven’t, it is a record-keeping method, where the chief accountant maintains important transactions recorded from time to time.

Similarly, there is a global ledger for Bitcoins, which maintains the creation as well the transaction of Bitcoins world over. This ledger is, of course, digital and surprisingly, it is not present in one single storage place like a unified server, but rather spread out all the world across several machines.

This mechanism has one chief advantage and one disadvantage too. The former being that this system does not risk anything like a server crash that will wipe out all the ledger data, and the later one being that if things go wrong, there is no central authority to work its way around and take heed of your problems.

So how does the ledger work? Let’s suppose that Richard has a Bitcoin record of 10 Bitcoins and Jean has that of 15. If Jean wires or transfers two of his Bitcoins to Richard, Jean will broadcast this transfer and create a record in the ledger that will update this transaction. Thus by whatever digital identity Jean and Richard are known as Bitcoin holders in the ledger, they will be shown with values 13 and 12 respectively.

How Do Bitcoin Transactions Take Place?

One needs to have a Bitcoin wallet, which is an account made for storing your Bitcoin balance. A Bitcoin wallet has two safety keys, one public key, and one private key. Each public key has a corresponding private key and vice-versa.

Therefore, a Bitcoin transaction authentication takes place only by the verification of the corresponding public and private keys. However, there is also another factor in play here, known as the message encryption.

Before Jean wants to buy anything with his Bitcoins, he will encrypt a message with his private key and the Blockchain computers will take a note of it. Later, he will broadcast this message, where the computers in the node will verify that the message was broadcast with the given private key. This process authenticates that the sender is the real buyer or whatever transaction he is doing.

Why Do They Call It ‘The Blockchain’?

As said before, a Blockchain ledger records all Bitcoin transactions that take place all over the world. However, a ledger is maintained in every node, which is a computer in the Blockchain network.

So how does one confirm that a transaction has taken place after another? A time stamp does not work in this case since it can be easily exploited to create false transactions and commit frauds?

This is where blocks come into action. A block is a page that contains a list of transactions taken place at a certain point of time, with each block containing a block number and a link to the previous block. This mechanism helps to authenticate transactions and ensures that nodes agree with each other on transactions since those blocks have one unified information about Bitcoin transactions taking place at each point in time.

These blocks are linked to one another in series which forms a chain of these blocks, hence a Blockchain.

What Does The Future Say?

Since blockchain technology is taking off pretty fast, let us hope that cryptocurrency proves itself to be the promised future currency. Most likely, Bitcoin will survive side by side to traditional fiat currencies, maybe until the next century when mankind upgrades to a Type I Civilization.

Also, you can have a look at pwc’s blockchain infographic.

Best Cryptocurrency Exchanges: List of Top 10 exchanges