Most of the cryptocurrency exchanges out there are what can be described as coin-to-coin trading platforms. Investors need to be aware of this reality, because such platforms have serious limitations, and can be more expensive than alternatives.
A coin-to-coin exchange only accepts payments in cryptocurrency, usually Bitcoin, or specific fiat currencies like the U.S. Dollar. Such a venue will only pay out in cryptocurrency, almost always Bitcoin, or major fiat currencies like Euros and Dollars. To make life more difficult, many coin-to-coin exchanges will not accept credit or debit card payments or bank transfers.
This can be a real problem for average people because they may not be able to access funds right away. Users can also lose money at coin-to-coin exchanges, because they may incur fees from selling altcoins, or converting them to fiat currencies.
Advantages to Coin-to-Coin Cryptocurrency Exchanges
Coin-to-coin exchanges are very popular because they offer some serious advantages despite their limitations. Many traders find that these advantages will outweigh the shortages of coin-to-coin trading platforms.
The biggest advantage to coin-to-coin altcoin exchanges is a greater level of privacy. You will not have to provide banking details, credit or debit card numbers, your address, your location, or your actual identity to trade on them. This can make you harder to track, and add a layer of security.
Other advantages include less bureaucracy and regulation which means coin-to-coin exchanges can be faster and easier to use. It can often take you a couple of days to set up an account at a commercial exchange. Many coin-to-coin platforms will let you open an account and start trading in a few seconds.
Coin-to-coin exchanges are also decentralized so it will be harder for people to track your transactions in them. Theoretically, decentralized exchanges are supposed to be less vulnerable to cyberattacks – because there is no centralized system for the bad guys to target.
Dangers at Coin-to-Coin Trading Platforms
Coin-to-coin exchanges often come with a much higher level of risk than centralized trading platforms.
Such exchanges can be amateurish and poorly organized which can make them vulnerable to hack. A related danger is that there is often little or no customer service and nobody to complain to if something goes wrong.
There might be nobody available to fix a problem or plug a security hole, as there can be at a well-run centralized exchange. Customer service at some coin-to-coin exchanges consists of an email that somebody is supposed to check.
A greater risk is that accounts at coin-to-coin solutions might not be insured. That means if money is lost or stolen it is gone forever.
A final risk is entanglements with regulators or tax collectors. Despite the claims of coin-to-coin platform operators, it is entirely possible that governments can track transactions on such platforms. That means accountholders might find their accounts blocked at some point.
Coin-to-Coin Exchanges are not for everybody
The bottom line here is that coin-to-coin exchanges are not for everybody. If you cannot afford to lose your investment, you should not put it into a coin-to-coin platform.
Yet for persons with extra money, a coin-to-coin platform can be a great alternative. Those who understand their limitations can make money through these mechanisms.
There are a number of excellent Coin-to-Coin trading solutions out there. Below is an examination of some of them.
Bitterex is a popular USA-based platform aimed at serious traders. The big advantage to Bitterex is that you can trade a wide variety of altcoins through it including some very obscure ones – such as Gridcoin, Cannabis Coin, and Gambit. The platform claims to offer trading in more than 190 cryptocurrencies.
Serious traders will like Bitterex because it offers a wide variety of markets and numerous currency pairs. It also offers Forex-type trading involving the U.S. Dollar and many cryptocurrencies.
Bitterex would be best for serious full-time traders and institutional investors interested in entering the altcoin market. Bittrex used to be one of the most popular exchanges, but they have quickly lost their mantle to Binance, which has surpassed Bittrex in almost every way. It’s still a good exchange, but they are slow to add coins, their fees are more expensive for trading, and they seem to be dated at this point.
Poloniex claims to be the “world’s most active digital-asset exchange.” Poloniex has a few of the features of centralized exchanges, including around the clock monitoring and air-gapped cold shortage. An air-gapped system is supposed to be physically-isolated from unsecured networks which can make it harder to hack.
Traders like Poloniex because it offers such amenities as margin trading and lending services. Poloniex’s exchange offers trading in a wide variety of currencies. A popular feature is trading in many ERC20 (Ethereum-based) initial cryptocurrency offering (ICO) tokens.
Like Bitterex, Poloniex is a professional-grade trading solution that will be too technical for many users. Poloniex would best serve persons who want to trade ERC20 tokens.
Polo seems to be throwing in the towel and giving up as an exchange. They no longer add new coins and customer support is next to non. People have horror stories of losing money and not being able to withdraw, with customer support refusing to offer any help. Beware.
The Bitfinex platform is a technical-trading solution designed for professional and large volume traders. The most noticeable advantage to Bitfinex is its transparency – it actually posts the trading volume online for every to see.
The major function at Bitfinex is spot-trading in a wide variety of cryptocurrencies. This includes some very obscure altcoins such as Streamr and Golem. A major focus of Bitfinex is margin trading, it offers Margin funding, margin trading and leveraged margin trading of peer-to-peer (P2P) funding.
Technical traders, and stock and currency geeks, will love Bitfinex because there are lots of charts. Casual traders are likely to get confused and frustrated by some of its more technical features. Bitfinex would be best for serious currency traders that want to play around with cryptocurrencies.
Binance offers a bare-bones exchange aimed at dedicated currency traders. The advantage to Binance is that offers a wide number of cryptocurrency pairs for trading.
Currencies traded include many ERC20 altcoins and a lot of lesser-known cryptocurrencies such as VEN and FUN or FunFair. Binance appears to focus on some specific coins including NEO and Bitkan.
An interesting feature of Binance is trading contests focused on specific altcoins. Many traders will the fact that Binance offers specific markets for Ethereum (ETH), and U.S. dollar-based trading.
Right now, Binance is the hottest exchange for cryptocurrency. Coins that end up on Binance tend to ‘moon’, fees are cheaper than other exchanges when you use BNB (Binances own coin) to pay them, and trading is fast. Binance recently added Stop Losses to their trading and they are going to be offering a DEX Exchange in the future.
Overall, Binance is sone of the best, if not the best exchange right now.
Cryptopia is an exchange and marketplace based in New Zealand that offers some professional services such as arbitrage. Its marketplace claims to be able to sell anything to anybody, anywhere in the world, using cryptocurrency.
The Cryptopia Exchange offers trades in an incredible variety of altcoins, including a variety of very obscure offerings, such as HeatLeadger (HEAT) and GeneChain (DNA). If you are looking for a weird coin it is probably being traded at Cryptopia.
One feature on Cryptopia’s exchange that we greatly appreciated was the posting of cryptocurrency websites. That can really help traders learn more about some of the currencies out there.
Cryptopia offers some extra layers of security such as what it calls hardware dongles. The dongles appear to be cryptocurrency hardware wallets associated with its system.
Serious traders and those interested in learning more about lesser cryptocurrencies will like Cryptopia. This platform’s added features might not be of much use to casual traders.
LiveCoin is a more commercial coin-to-coin solution with a focus on Bitcoin. LiveCoin’s operators prefer Bitcoin as a payment method, and they even announced that they will no longer take bank transfers.
The major activity at LivecCin is Bitcoin trading including trading of Bitcoin against fiat currencies. This includes some of the lesser fiat currencies such as the Rubble. LiveCoin also offers trades in some of the popular altcoins including Einsteinium (EMC2).
There are some very useful features at LiveCoin including Market Data revelations. LivecCin has a feature that tells traders which altcoins are the most pumped (bought) and dumped (sold), which can be helpful. It also tracks some very obscure cryptocurrencies such as FirstBlood.
Another advantage to LiveCoin is that its team tracks changes to cryptocurrencies and will keep users informed of them through its LiveCoin News feature. This includes the changes to the structure of cryptocurrencies. That indicates LiveCoin is researching cryptocurrencies for due diligence.
LiveCoin News is also useful for people who just want to keep up with changes in the ICO market. That makes LiveCoin an excellent research tool as a well as an exchange.
Persons who are looking for a professional trading venue for cryptocurrencies and ICO tokens would be well served by LiveCoin. Those seeking information about altcoins can also be helped by LiveCoin.
EtherDelta has been attracting a lot of attention lately because it is a trading venue for Ethereum and ERC20 (Ethereum-based) cryptocurrencies. The drawback to EtherDelta is that it is a totally do-it-yourself trading platform.
If you trade at EtherDelta you will be completely on your own. That makes it a good resource for highly-experienced traders and seasoned cryptocurrency geeks. Everybody else should probably look elsewhere.
EtherDelta is a great place to view new ERC20 ICOs and to keep track of them. It is a totally Ether-based trading platform, which means Bitcoin and other non-Ethereum cryptocurrencies are not welcome. EtherDelta itself is planning to generate its own token and conduct an initial cryptocurrency offering (ICO).
All of this makes EtherDelta a trading platform for serious Ethereum geeks. Everybody else should use it only to research ERC20 tokens and ICOs. EtherDelta is a great place to learn the prices of ICO altcoins – if they are ERCO20 tokens.
Note, the original ownership for ED has changed and the new owners are shit. ED is dying and they have been hacked several times in the past month. I no longer trust them or recommend peoiple use ED. So beware.
How to use Coin-to-Coin Exchanges
Coin-to-coin exchanges are a valuable resource for cryptocurrency investors and traders. In addition to offering more advanced trading opportunities, some of these exchanges are sources of information you will not find anywhere else.
A great use for coin-to-coin exchanges is to learn the Coin Price, Market Volume, and other characteristics of altcoins. Another is to determine if people are really trading a cryptocurrency. Coin-to-coin platforms can serve as a great fraud detector because you can use them to spot pump and dump and other scams.
Even if they do not trade on them, all cryptocurrency traders and investors should research coin-to-coin changes and how they work. These decentralized trading platforms can be a valuable resource and a great source of information that cannot be found anywhere else.