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Fortunately, there are many exchanges where you can trade Bitcoin and other currencies. However, the sheer number of options can be a problem. Which exchange to choose? What are the best Bitcoin exchanges? In this article we mention a few things to keep in mind.
Things get complicated when we need to choose the best exchange platform. Many of the best sites are relatively new.
Bitcoin has been around for years, but only recently has its popularity increased to levels that were unimaginable, five years ago. Long-term forecasts, beyond occasional drops, are that the main virtual currency will continue to break records. It is only natural, then, that exchange sites should proliferate.
And what is the problem with the number of exchanges that exist? Well, not all of these exchanges are able to offer the service that customers expect. Service and reliability are the key here, and there is everything in today’s market!
What is the purpose of an exchange?
Let’s summarize. An exchange is the market where Bitcoins and other cryptocurrencies are bought and sold. We are talking about a generally virtual space where different means of payment are accepted, including shares or other financial securities that are accepted by the community that makes up the exchange.
The purpose of the exchanges, as you can guess, is to trade. What is trading? It is the buying and selling of cryptocurrencies with the aim of increasing profits from the price fluctuations of virtual currencies.
There are two main types of exchanges, with different characteristics: centralized and decentralized markets.
Centralized exchanges are used by most investors. They are online trading platforms and are distinguished by the use of an intermediary – a third party – that assists in the execution of transactions.
Like a traditional bank, this intermediary is a "trusted figure" for both buyers and sellers. Centralized exchanges offer an image of security.
So, what would a decentralized exchange be?
We are talking about an exchange characterized by P2P (peer-to-peer) exchanges. The site where sellers and buyers of cryptocurrencies connect directly.
The absence of central authority or intermediary and the absence of custody is what characterizes decentralized exchanges. To validate transactions, these platforms use so-called smart contracts that are executed automatically and record transactions on blockchains.
Centralized exchanges are backed by a company. Users must register in order to trade. It is also subject to AML, KYC, etc. regulations.
In decentralized cryptocurrency exchanges, users do not necessarily have to create an account and can trade directly from their private wallet.
Further subdivisions are also found within exchanges. Instant exchanges, for example, allow instant purchases. Meanwhile, derivatives exchanges give access to the crypto derivatives market.
We can also find options that allow operations with fiat currencies and other exchanges that only allow operations with pure cryptocurrency exchanges.
Are operations on an exchange safe? This is the doubt of many. And yes, buying and selling Bitcoin through one of these platforms is fast and secure.
The buying and selling site brings together a considerable number of actors (buyers and sellers; supply and demand) which accelerates the speed of the agreements and, therefore, of the transactions. Some exchanges, the most reliable ones, even offer insurance protection to their users.