Richard is a professional writer. When he's not creating, he's actively pursuing his goal of becoming a handsome billionaire.
The Bitcoin Phenomena
Unless you've been in a complete media blackout for the past 8 or 9 years, you must have noticed the rise of Bitcoin (BTC) as well as other cryptocurrencies (Altcoins.) You've probably think you've missed the boat, so to speak, on profiting from this incredible phenomena.
I thought I did as well. Actually, in hindsight, I did miss out on an incredible opportunity. Back in 2010, I was offered 500 BTC to write 5 articles for a tech-blog. Bitcoin was still relatively new, to me at least, and I had only heard that it was used in shady dealings on the dark web. So, I turned the client down, not because of the rumors but because the value was roughly equivalent to $12 per article, which was nowhere near the value I placed on my writing.
Fast forward 7 years and the value of a single Bitcoin is roughly $15,000 USD. Doing the math, I missed out on a $7.5 million. But, how was I supposed to know that this new phenomenon of cryptocurrency was going to explode like it did?
I couldn't. Nobody could. Bitcoin was just the start. A couple years later we see the creation of several more cryptocurrencies and the numbers continue to rise each day. As of this writing, there are approximately 1324 different altcoins, as they have become to be known.
At the start of it all, Bitcoins were, and in many instances still are, traded between peer to peer. But with so many new altcoins out there, it was only natural to see the rise of crypto-exchange markets to allow easy trading and speculation.
What is a cryptocurrency exchange?
Think of a cryptocurrency exchange as similar to the stock market. It is a place where individuals, as well as institutions, can come to trade their virtual currency for other virtual currencies or for fiat (a government-backed currency.)
Crypto-exchanges provide real-time transactions and the users can see the value of each cryptocurrency in comparison to Bitcoin, their own fiat currency, or in relation to other altcoins. With this, people can make informed decisions, or speculations, then buy or sell based on those decisions.
Depending on the exchange, fiat currency, Bitcoin, or other altcoins would be deposited into an account and then use BTC as the base to make transactions in relation to crypto-pairs. For example, I could open my first account at an exchange and make a deposit using either a bank transfer or my credit/debit card which would then be converted to the equivalent value of Bitcoin.
I could then use my BTC to purchase other altcoins which would then be stored in my Crypto-Wallet. I could then watch for the rise or fall of those newly purchased altcoins until I am ready to cash-out. I would then need to sell those altcoins and the market would convert the transaction back to BTC before I could withdraw the value back to my chosen fiat and through a bank or card transfer.
If you are dealing with altcoins instead of just BTC then you can expect multiple transactions to take place and depending on the altcoin it could take up to an hour to find buyers for your altcoin to complete the transaction. And then come the fees.
What is the best crypto exchange for me?
That is, of course, a harder question to answer because it would be based on your comfort level, the fees, the options to make deposits and withdraws, and the types of cryptocurrency you would like to trade in.
While there are literally dozens of crypto exchanges to choose from, some are inaccessible to certain countries. Some are limited in the types of transactions that can be made, and some are just too new to have garnered enough trust.
Below, you will find a listing of the top 10 crypto exchanges based on Alexa traffic, trust level, accessibility, at least to the US, and the types of transactions they allow.
I would suggest visiting multiple exchanges to determine which one is the right fit for you. Read their FAQ's, find their forums and ask members questions, and do your due diligence. I would also suggest opening at least 2 accounts with different exchanges so that you could split-test your transactions.
I'm not going to recommend any single exchange as they all have their pros and cons. But, at the end of this listing, I will tell you the exchange that I am most comfortable with and why.
The Cryptocurrency Exchanges
Bittrex – This is one of the most heavily used exchanges in the US. It is not beginner-friendly in that deposits are only made with other cryptocurrencies. There are roughly 250 altcoins that are accepted and traded on this exchange which makes it very attractive to users.
They have a basic account and an enhanced account but before you can start trading, you must verify your identity. This is required because of their anti-money laundering policy. This exchange will allow you to trade in fiat currency but only if your deposit exceeds $10,000USD, otherwise you are limited to trading in the 250 crypto-pairs.
GDAX – (Now Coinbase Pro) This is also a heavily used exchange in the US and also not beginner-friendly. However, they do allow initial deposits using fiat through a bank transfer and then allow for trading in several crypto-pairs with the main focus on Bitcoin, Etherium, and LiteCoin.
This exchange can be daunting for the beginner and is more geared towards advanced investors and institutional investors. One of the great features of this exchange is that USD deposits are FDIC insured, up to $250,000.
Binance – This is one of the newer exchanges and is already getting heavy usage here in the US. It is great for crypto to crypto trades and they currently offer about 48 different crypto coins to choose from.
Initial deposits can only be made with other cryptocurrency and only using the coins they trade in this exchange so make sure to investigate properly.
Poloniex – While this may be a heavily used exchange, there are some concerns that users have mentioned, including very poor customer service and prolonged wait times for tickets as well as withdraws.
The site only allows deposits of cryptocurrency but they do have 90+ crypto-pairs to choose from which makes it an attractive exchange for those not wanting to trade in the top 7, or so altcoins.
Gemini - You may have heard of the Winklevoss twins, the co-founders of Facebook? Well, they're also the founders of this exchange which is one of the most popular even though it only trades in Bitcoin and Etherium.
They do accept bank transfers and wire transfers to make deposits and withdraws. After signing up and making a deposit, you can immediately start trading, though you'll have to wait until your account is verified in order to make any withdraws. This site stands out because of its superior customer service and beginner-friendly atmosphere.
Kraken – Allowing deposits and withdraws using bank transfer or cryptocurrency makes this site attractive. They allow trading with 14+ of the most popular altcoins which tend to be the most traded by volume across all platforms.
With an easy identity verification system and low trading fees, this exchange is very popular in the US, Europe, Canada, and Japan.
Bitfinex – This is one of the largest exchanges by trading volume and also not beginner friendly. In fact, this site is geared towards advanced investors but they have great guides that make it very popular among traders and investors.
This site was hacked a while back but made good with their account holders soon later. It allows for over 51 crypto-pairs and has very low fees. Bitstamp – This is one of the longest longest-runnings, having been established in 2011 and since it has been licensed by the Luxenbourg Ministry of Finance, it is also one of the most secured.
Deposits and withdraws can be made with bank transfers, credit/debit cards, and with another cryptocurrency. The buy/sell interface is easy and beginner friendly. The main downside to this exchange is that it only accepts about 4 cryptocurrencies; Bitcoin, LiteCoin, Ripple, and Ether.
Cryptopia – This is one of the more exciting exchanges in that it is much more than a place to trade cryptocurrency, which they currently trade more than 500 altcoins. They also have a peer to peer marketplace where items are listed auction style or classified ad style and then allow for the bidding using a determined cryptocurrency.
The exchange is located in New Zealand so the marketplace may not be a great match for many and they do not trade in fiat to BTC, you must trade in cryptocurrency unless you are a New Zealander and register a bank account, then you can deposit and withdraw in fiat.
HitBTC – This exchange allows for the trade in fiat and cryptocurrency, however, in order to trade in fiat one must have a verified account. Currently, they only trade in about 10 crypto/ fiat pairs.
One of the best features of this exchange is the Demo Exchange where the new user can get acquainted with the interface and make demo transactions before making any deposits of real value.
As with any investment platform, do your due diligence and investigate thoroughly before jumping on board. Once you have selected an exchange that you would like to work with, make sure that you have your account verified BEFORE making any deposits. Also, determine the wait time that is necessary after making a deposit for making trades and withdraws.
You can imagine, exchanges are relatively new and many are still going through growing pains so if you have an issue, it may take some time to get it resolved through their customer service.
Investing in cryptocurrency is a newer phenomenon all together that does not come without risks. The most popular altcoins right now are Bitcoin, Ethereum, LitCoin, Ripple, Dash, Monero, Zcash, Dogecoin, NEO, and IOTA based on their market share and trade volumes.
There are more than 1300 altcoins and for the majority, you can think of them as similar to penny stocks with a value to a relatively small few that know about them. That's not to say you can't earn a good deal of profit from them. In contrast, you can also lose a lot, so investigate any coin you would like to invest in.
Again, I'm not taking sides with any of the above-listed exchanges but I have selected Bittrex and Gemini as the exchanges I wanted to work with. Bittrex because of their popularity and diversity of altcoins and Gemini because of their customer service and ease of use.
Comparison of top 10 Exchanges
Las Vegas, USA
San Francisco, USA
Bank Transer, BCT, LTC, ETH
New York, USA
San Francisco, USA
Bank Transfer, Altcoins
Bank Transfer, Altcoins
Bank Tranfer, Credit/Debit Cards
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Richard Bivins (author) from Charleston, SC on December 10, 2017:
Lawrence, Bitcoin is super volatile at the moment because it is going to start trading in the futures market (Sunday.) If you're not an experienced investor then I would wait a week or so to see the direction it is heading. My personal opinion is that it will reach 20k in 2018 summer so purchasing it now is still a good deal.
Oztinato, There isn't much information on SING. It seems it was introduced as an altcoin with the purpose to allow miners to use their preferred algorithm on their mining system... It had an initial coin offering (ICO) around .70 cents USD a few months ago but has fallen to less than .oo3 cents USD. Personally, I would avoid it. Research altcoins on coinmarketcap.com to see their rise and fall and determine trends.
Andrew Petrou from Brisbane on December 10, 2017:
Can you tell me anything about the new si singularity cryptocurrency?
Lawrence Hebb from Hamilton, New Zealand on December 09, 2017:
I'll start looking into it, and see if I can come up with a plan.
One thing I have discovered is 'Bitcoin' seems to go in waves, there's a wave of investment, then a 'bust' where it falls dramatically, but because it's computer code, it can't be 'printed' like traditional money, so there's always a finite supply it rises again.
I wasn't aware of the other 'altcoins' and that might need me to check out some more while I get my plan (and act) together!
Thank you for the information.
Richard Bivins (author) from Charleston, SC on December 09, 2017:
Lawrence, I started out with a single $100 deposit though I believe one can start with less than that. The $100 fiat was converted to BTC in my Wallet and then I was able to use that to purchase a smaller valued altcoin. Not going to share which altcoins I invest in as I'm not a financial adviser and a novice where cryptocurrencies are concerned. I will say that I've more than doubled that investment. If altcoins are a goal then I would suggest trying to get in on Bitcoin as it is going down in value in the short term (before it starts trading futures) as I just have a feeling the futures speculators are going to cause a rise in the price of BTC.
Lawrence Hebb from Hamilton, New Zealand on December 09, 2017:
I heard of Bitcoin when it first came out, and pretty much thought it was a 'flash in the pan' that would soon pass.
A couple of days ago I was talking with a colleague who always seems to be 'relaxed'
I found out why, he doesn't need to work, as he told me he makes more trading Bitcoin than he can ever make in his normal job (A Bus driver).
One afternoon last week he made $6k trading!
Naturally I'm interested, I'd like to know what the minimum amounts are that people can start with, can they start small?