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Ever since its debut in the world, bitcoin has been at an all-time high in popularity. The majority of this popularity came from the exposure brought to bitcoins by the influencers and internet personalities. Anyone remotely doing anything in finance would speak about their returns and this, in turn, caused bitcoins to become one of the most popular cryptocurrencies in the world. However, even after their obvious growth in popularity mining bitcoins was not how people got hold of bitcoins. People are gaining bitcoins by buying them. Most of these bitcoins were bought on crypto exchanges. If you are into crypto trading and looking for a reputable platforms/community, you can visit Ekrona for more information.
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What a crypto exchange is?
A crypto exchange is nothing but a digital marketplace where traders from all over the world buy and sell the token of Bitcoin or BTC. This exchange place has opened up a plethora of investing opportunities for many people. That is why more people are coming on these platforms to trade bitcoin. Platforms like the Bitcoin era give people a simple way of trading successfully and many investors are preferring it.
Role of bitcoin exchanges:
The role of the bitcoin exchange is similar to the traditional stock market approach we see. Here the exchange platforms are responsible for bringing the buyers and sellers together on one stage. Traders similar to stock markets can have market orders or limit orders where they can buy or sell more bitcoins depending on the price. To be able to turn a profit the trader has to either sell at a higher price than the coin was purchased or he has to buy at low prices for future selling opportunities. Therefore, these are the principles of exchange platforms.
It is easy to trade through the exchange platforms.
- You first need to register with them and open a bitcoin account.
- Once the verification is complete they have to enter their payment details and this will set them up for future transactions.
- Then they have to link the bitcoin account with their bank account.
- Now funds have to be provided to the bitcoin account.
- Once these steps are done they are ready to start using the bitcoin exchange platform. They now can buy bitcoin.
What are the different trading platforms?
There are essentially two types of exchange places- centralized, and decentralized.
Centralized bitcoin exchange:
This is one where a centralized agency or third party is involved. The majority of the crypto exchange platforms follow this method. Herein there is a separate banking partner that allows for making transactions using fiat currency.
This system has its share of pros and cons.
- Since these are entirely based on user interactions the platform is easy to use. It is easier for first-time investors to navigate through the platform and make their transactions.
- In addition to this, such platforms also provide users with many tutorials to help them understand the features of the platform better.
- Also, many people trust this type of platform as the involvement of a centralized third party gives them more reliability in the system.
- However, such platforms are also extremely susceptible to hackers and there have been various instances of hacking.
- And like all agencies, such platforms also invoke a fee that goes against the basic foundation of Bitcoins.
Decentralized Bitcoin exchange:
The other type of bitcoin exchange platform is a decentralized one. This is a pure peer-to-peer exchange platform that does not require any form of intervention from a central authority. The advantages of these platforms are-
- It does not require any exchange authority to facilitate the transactions.
- So, no fees are involved here. Given the very nature of bitcoin, many people prefer having such platforms in place of centralized ones.
- This platform offers more anonymity to the users and also mitigates the hacking risk.
- Hacking this platform is much tougher compared with a centralized exchange platform.
- Also one of the biggest advantages of such exchange platforms is that we can easily avoid any kind of market manipulation as well.
However, with the benefits, there are many drawbacks attached.
- Such platforms offer very little liquidity and make it difficult for you to convert your BTC to cash or vice versa.
- Such exchange platforms are also fairly complex to grasp.
Hence, these are the few important things that you should be aware of regarding bitcoin exchange places. You have to choose your exchange place wisely depending on the kind of benefits you want.