What is a Cryptocurrency Exchange?
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While traditional global economies around us are crumbling due to COVID-19, the cryptocurrency market has been booming! 2020 has been a great year for crypto, and whether you’re keen on earning some quick cash or you’re a true crypto fanatic, it’s never too late to buy.
There are several ways to make a purchase, although today we are going to learn about what a crypto exchange is and how they work.
Understanding a cryptocurrency exchange
To wrap your head around exactly what a crypto exchange is, think about it like a stock exchange. An exchange allows a user to buy or sell cryptocurrencies in return for fiat money (government-backed currencies like the NZD). A user can also exchange or ‘swap’ one cryptocurrency for another.
They are similar to stock markets in the way that a buyer places an order for crypto at a certain price, and the transaction is settled when a seller matches the buyers’ price. On major exchanges such as Bittrex, Coinbase, or Bitstamp, this usually takes place in a matter of seconds.
There are hundreds of crypto exchanges worldwide and each accepts different types of payment to others. Some crypto exchanges accept a bank transfer, credit or debit card, currency contracts, or even gift vouchers.
Exchanges make money by charging their users a transaction fee. Each exchange advertises different fees, although they are commonly around 0.25%. However, this can also depend on the volume of transactions.
To use an exchange, you will first need an account. To make an account, this includes several verification processes to ensure the user’s identity. While this may seem like a nuisance, it is required to follow anti-money laundering laws and to protect the exchange’s customers.
Some exchanges can take weeks to process a verification, but it’s not all bad news. Easy Crypto’s average verification time is less than 2 hours. You can visit Easy Crypto’s verification guide for more information.
Learn more: What cryptocurrency should you buy?
How does a cryptocurrency exchange work?
A key thing to understand is that one crypto exchange can be very different from another. Some exchanges allow their users to store fiat and cryptocurrencies on the exchange, while some do not. However, an exchange should NOT be treated like a wallet.
A cryptocurrency wallet is a place to store your currency after it has been bought, allowing you to manage your digital assets with ease.
An exchange should only be used to buy and sell crypto or store small amounts temporarily. Now, you might be asking yourself why? The answer is the S word.
Security is and should always be talked about when storing crypto, and to put it simply, a crypto exchange is not safe. Since 2011 alone, over $1.65 billion USD of crypto has been stolen from exchanges.
Crypto exchanges are not hacker-proof, and the exchange’s intention is to offer a marketplace, not a storage space. Crypto exchange hacks are becoming more elaborate each year, and even New Zealand isn’t safe. In early 2019, Cryptopia was hacked for $30 million NZD, and this is now regarded as the biggest theft in New Zealand’s history.
However, a crypto exchange does put security measures in place to ensure customer’s safety. Follow these tips to help protect your crypto!
- Use Two-Factor Authentication (2FA). Most exchanges will offer 2FA through a mobile application, like Google Authenticator. It’s simple, safe, and secure.
- Always use a secure password. Most exchanges put in tough password restrictions, but your crypto is also your responsibility! Always set a strong and secure password.
- Cold Storage. Exchanges that store crypto in cold wallets are much harder to hack. Take precautions by doing some research into an exchange’s storage and learn more about cold wallets first.
Learn more: Click here to read our guide on crypto wallets!
Understanding Easy Crypto
So, is Easy Crypto a cryptocurrency exchange? Well… not exactly. Easy Crypto is primarily a retailer, rather than a crypto exchange. We do things a little differently to ensure security and to protect our customers.
Exchanges hold onto the customer’s fiat and crypto, where instead we simply just move the funds through our system while an order is being processed. Simply, your crypto orders will be sent directly to your crypto wallet. If you’re selling, then the fiat currencies will be sent directly to your bank account — no need for a stablecoin intermediary!
Some crypto exchanges can be difficult to navigate and complicated to new users. Easy Crypto takes this hassle away by offering a simple trading interface. It really is just as easy as putting through an order, and we’ll handle the rest!
Get started with cryptocurrency
Are you interested in buying or selling crypto? Or, Are you interested in Bitcoin trading? Leave out the complicated interfaces, long verification times, and having to worry about security.
Easy Crypto pride ourselves on our security so much that we place a 100% guarantee on all our customers’ orders. We guarantee you a secure, safe, and smooth sailing service! Make your move into the crypto scene today with Easy Crypto.
2020 hasn’t been all bad, well… that’s if you look at the crypto market. It’s never too late to get into crypto, and if you’re keen to learn more on how to get started with cryptocurrency, you can always contact the Easy Crypto team.
We are always ready to help.