What is a cryptocurrency exchange?
Today, cryptocurrencies have become a fairly valuable asset, demand is growing for them every day, and developing technologies are actively influencing the development of the virtual coin market. There are currently hundreds of online cryptocurrency trading platforms. The crypto exchange acts as an intermediary for the seller and the buyer who wants to purchase electronic currency.
On cryptocurrency exchanges, people buy digital currency using bank accounts and electronic payment systems, trade various altcoins, turn them into fiat money.
Crypto exchange as an information product consists of hardware and software parts. The program shell registers the user and creates an account where he replenishes his digital and fiat accounts or withdraws money, places orders for buying and selling. Many exchanges provide additional functions chat, a news feed, course analytics, etc.
The hardware is represented by servers on which operations are performed and data is stored about users, their accounts, transactions conducted by them.
How to trade on the exchange?
Registration on exchanges is free and is not difficult for an experienced Internet user. On some exchanges, users are divided into several levels, and some require verification for a “level up”, including sending passport data and scans of documents. Anonymity is lost, but the user has access to more trading operations, methods of depositing and withdrawing money.
There are two ways to replenish cryptocurrency accounts. The first is to transfer bitcoins or other digital coins from the addresses of your account to the address that the exchange will indicate to you.
Or, if you do not have bitcoin wallets, top up your accounts in regular currency and buy BTC or altcoins with them already on the exchange.
Each exchange has its list of options for replenishing the balance with ordinary money and withdrawing funds. The exchange itself is a platform where everyone puts up lots for buying or selling cryptocurrency at any price, and then you just have to choose the best offer.
The main source of income for cryptocurrency exchanges is the commission for each transaction, as well as for the withdrawal of funds. Commission for the transaction is equal to 0.1-0.2% because exchanges need to make many transactions. Withdrawals will cost more, 2-3 percent.
You can play both on courses against ordinary currencies, and the relative fluctuations of digital coins: for example, Bitcoin/Ether pairs, or Litecoin/Dash. The more options a particular exchange offers, the better.
The trading process itself isn’t that hard you need to place an order for a specific amount and indicate the rate at which you want to buy or sell. As soon as a person who agrees to a deal appears, it is immediately concluded. The main thing is to guess where the rates will go to. Those currencies that are growing, urgently need to be bought. What is falling, you should sell. Solid start-up capital is needed for solid income, however, some exchanges offer leverage.
What will happen if the exchange is hacked?
As already mentioned, after creating an account, the exchange will indicate the address to which funds should be transferred in order to start trading them on the exchange. But keep in mind, although it is declared as yours, it is generated by the exchange server, and the private keys to it are stored exactly at the exchange.
If the exchange went broke, robbed by hackers or closed by law enforcement agencies, the chances of users to get their money are minimal. In such cases, it all depends on the decency of the owners and the scale of the problems.
List of exchanges that have never been hacked: https://bit.ly/3895aRV
The work of exchanges is built primarily on trust, so it’s not worth transferring large amounts to new exchanges, even if they have useful functions and options. It’s better to start with a small amount, and only when you are convinced that the project is serious, make big deals there.