At a pace the creation and development of new bitcoin exchanges are taking place, knowing everything about them before using them became necessary. For bitcoin users, it is most important to do business with reliable platforms only.
For new investors, it also becomes difficult to understand which exchange is better for their needs of trading. So, in this article, we have delivered a thorough idea about the types of bitcoin exchanges, their role in bitcoin trading, and how to choose the right bitcoin exchange platform. Read on to know more in detail!
All About Bitcoin Exchanges: How They Work, Their Role, And How To Choose One
Types of Bitcoin Exchange Platforms
When it comes to talking about Bitcoin exchange platforms, they are of two types, i.e., centralized bitcoin exchange and decentralized or Peer-to-peer (P2P) bitcoin exchange. But, one more type of exchange called hybrid bitcoin exchange is being evolved recently. We will know about all these exchanges further.
Role of Bitcoin Exchange Platforms
A centralized exchange is the most traditional type of exchange. This is just like a stock exchange that we usually used but here bitcoin and other cryptocurrencies are being traded. These exchanges are controlled by third-party companies. They have certain rules and regulations for facilitating crypto trading. That’s why these exchanges are called centralized. They also charge some fees for making transactions through it that you will find in other exchanges too and some regulatory fees with it.
As the exchanges are well maintained by third-party companies, they provide more security and a user-friendly website so that trading becomes easy for beginners. They also provide some analytical trading tools.
They provide buying and selling bitcoins in market bid price in exchange with fiat currencies as well as other cryptocurrencies. Transactions are faster here.
Most of these exchanges have a simple KYC verification process for registration like registering just by your email address and in some cases, the process is complicated and needs so many IDs to verify. One negative thing in these exchanges is you don’t own your private key completely and this is why scamming in these exchanges is believed to be easy than in other exchanges.
Role of a Peer-To-Peer Exchange Platform
By the name, the role is pretty clear that these exchanges provide direct user-to-user bitcoin transfers. No third-party control is here and that’s why you have to give a lower fee. They work by smart contract technology. But this is one reason why you have complete control of the trading keys and do trading with more security.
These exchanges are like a marketplace where you being a buyer or a seller can offer a selling or a buying price and when another user is attracted to the price you both can communicate and make a deal. When both are agreed, the bitcoins and the money can be transferred directly by sharing the bank details and the public key.
Role of Hybrid Exchange Platforms
A hybrid exchange is developed with the positive features of both centralized and decentralized exchanges. Here you get complete control over the trade you make because you own the private key like in a P2P exchange and besides this, transactions are faster here like in a centralized exchange.
These exchanges aim to give the most convenient features and the best trading experience to the users but they are still in the development phase now.
Helpful Tips To Choosing A Bitcoin Exchange Platform
You can choose any type of exchange that has just been described above but, before choosing the best and most reliable one, you must take some precautions to avoid a fraud trap.
- Researching the exchange’s reputation in the market is a must.
- Checking the customers’ reviews is a must.
- The rules and regulations must be taken care of. Make sure you read and understand them.
- Make sure that you choose a reputable exchange platform.
After all these things are done if you are satisfied with the exchange, you can register with them. For this instant, you can visit a website, bitindexai.me which is also preferred by many experts.
So, that’s it! Hopefully, this article has helped you gain information that will surely lead you to success in Bitcoin trading journey. Happy and secure trading!