There are several different types of trading platforms, some of which are specifically designed for cryptocurrency traders while others are intended for more general use.
In this article, we’ll explore three different types of trading platforms—exchanges, brokerages, and merchant services—and explain what each one offers and how it can benefit cryptocurrency traders. Let’s get started!
Centralized exchanges vs. decentralized exchanges
While centralized exchanges are easier to access and often carry more liquidity, they also come with a host of . One glaring issue is that exchanges are often targets for hackers.
In addition, there is usually a lot of noise (i.e., things happening on an exchange that isn’t directly relevant to trading) that can make it hard to buy or sell coins if you’re looking to liquidate quickly.
A popular decentralized exchange protocol known as 0x makes it possible for users to trade with one another without relying on a third party.
The top 15 exchanges based on trading volume
As of Feb. 2018, these are 15 of the biggest players in cryptocurrency trading. In order of largest daily trading volume, they are: Bitfinex; Bithumb; bitFlyer; Bitstamp; Coinbase Pro (GDAX); Poloniex; OKEx; Gemini; ItBit; Huobi.pro; HitBTC; Binance; Korbit; BTC China.
The list is regularly updated on CoinMarketCap. To buy cryptocurrencies with fiat currency (dollars), you’ll need to open an account with one of these exchanges and then link a bank account or credit card. Then you can start buying your favorite coins.
Keep in mind that if you plan to trade frequently, using a platform with lower fees might be more cost-effective than using a major exchange like Coinbase Pro or Kraken. You can also buy cryptos directly from another person through LocalBitcoins, which connects buyers and sellers online based on location.
Similar to how Craigslist works for local classifieds—or via sites like eBay. Peer-to-peer marketplaces offer reduced fees since there’s no middleman to take a cut.
Crypto broker options are available
With a wide array of different cryptocurrency exchanges out there, it’s no wonder that most people don’t know where to turn for their next trade. While some are more trustworthy than others, when you look at how each exchange works, it can be difficult to tell which ones are best for buying Bitcoin.
Before you jump in head first, we’ve created a simple guide to help you get started with your first few trades. Here’s what you need to know about choosing a broker: What is an exchange? Choosing an Exchange: Once you understand how trading works, it's time to choose an exchange.
Regulated brokers in the United States
While some cryptocurrencies are designed to be used in privacy, others are intended to be used for business purposes. If you're not planning on selling your bitcoin or other digital currency, regulated brokerages are an option.
These companies, which include Circle and Coinbase, act as middlemen that facilitate transactions between buyers and sellers of the cryptocurrency. You pay them a small fee for their services (1% is standard), but for those looking to invest serious money in digital currencies like bitcoin, it's worth it to have someone oversee all transactions.
That way you can ensure there's no funny business going on with your assets. However, if you plan on spending your cryptocurrency soon after you buy it, using an unregulated exchange like LocalBitcoins may be more beneficial.
GDAX vs. Coinbase Pro
Coinbase is one of the most popular online exchanges to buy bitcoin, Ethereum, and bitcoin. They have over 10 million users and process about 25% of all bitcoin transactions worldwide. Coinbase operates both a global platform (Coinbase) as well as a local platform (Coinbase Pro).
While they offer similar features, there are some notable differences in fees and supported cryptocurrencies. In order to help you decide which platform is right for you, we’ve compiled a complete guide with everything you need to know: GDAX vs Coinbase Pro Review.
The comparison table below compares both platforms across a number of factors. As you can see, GDAX and Coinbase Pro share many similarities but also have their own unique features that make them suitable for different types of users.
If you want to learn more about each platform before making your decision, be sure to check out our full reviews! Let's take a look at what makes these two exchanges unique from each other.
Cryptocurrency payment systems and wallets
If you're interested in buying Bitcoin or another cryptocurrency, first consider your payment system. The way you pay for it will affect how much cryptocurrency you purchase at any given time. Today, you can buy cryptocurrency with a credit card, wire transfer, or even cash.
If your bank supports direct purchases of cryptocurrencies (most don't), then that's how you'll likely buy it. Find out which exchanges accept your method of payment before you sign up. Many exchanges require that you verify your identity by submitting personal information such as a government-issued ID, so be prepared to wait between two and six weeks to become verified.
Once you've opened an account, some exchanges will let you start trading immediately; others may take several days to send you an activation code via email—or may not send one at all. It's best to check on these details ahead of time if possible. Some popular cryptocurrency payment systems include
Conclusion
There is a vast array of online trading platforms in existence, each with its own benefits and drawbacks. As we mentioned above, education is paramount when choosing an exchange to trade cryptocurrency on.
Fortunately, we’ve compiled a detailed list of all of your options below for your convenience: So which one is best for you? It really depends on what you want out of your trading experience. If you’re new to cryptocurrency trading and need to know how to get started, Coinbase has a simple interface that makes it easy for newcomers to enter into their first transaction quickly.
If you’re looking for more advanced features like stop-loss orders or margin trading, check out some of our other recommendations such as Kraken. And if you're looking to try something entirely different from traditional exchanges, check out Changelly.
Whatever platform or broker you choose, make sure to educate yourself about how they work before getting started. And remember: always practice safe trades!
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