Why Should You Use Cryptocurrency?

Why Should You Use Cryptocurrency?

Cryptocurrencies are numerous and versatile and can be utilized as entirely private bank accounts and payment cards for almost any occasion. They offer a multitude of ways to earn a form of interest with little or no effort and help users protect sensitive data and holdings on the go 24/7.

It is obvious that the cryptocurrency industry has grown by leaps and bounds in the past 10 years since Bitcoin was born. Fintech is transforming the financial industry and more and more people are getting onboard. Shopping in-store and online is going fully digital but raising cybersecurity fears, which can be drastically reduced with a broader acceptance of cryptocurrencies as a means of payment.

Crypto as Money

Nowadays, almost anything can be paid directly with cryptocurrencies: homes, condos, boats, cars, clothing, electronics, health and pet products, food, wine, accessories, plane tickets, vacations, tools, musical instruments, as well as dating services, professional services, internet services, and, of course crypto gear.

Without pointing out the obvious, let’s look at the most interesting things digital currencies can buy you:

  •  Enjoy a Thai or Indian restaurant in Montreal or have Dutch pancakes in Aruba
  •  Buy vintage furniture in Massachusetts or rent an office in Miami
  •  See the Cerro Negro volcano in Nicaragua or charter a yacht in South Florida
  •  Buy a Benz or a Beamer in California or a Rolex in Europe

Mobility

Mobile payment is the new trend. Being able to use a smartphone to pay for something instead of a credit card is so much more convenient.

From Paypal and Apple Pay to Mastercard’s Paypass and Visa’s Paywave with near-field communication (NFC) technology and modern POS terminals, payments have never been easier. The same privacy and security issues arise as with the rest of traditional and fiat-based financial transactions. Too much data in one place.

All currently available mobile fiat payment processors store credit card information which include all of our financial information and more. Not to mention that all that data is online and on our mobile devices everywhere we go.

Cryptocurrencies are a safer digital cash option and are ideal for mobile payments by default due to their virtual, decentralized nature.

A Growing Market

Bitpay, one of the most successful crypto payment gateways, is processing $1 billion worth of transactions annually at a rate of a quarter million transactions per month. Coinpayments already serves millions of vendors in 200 countries and has just integrated with Bittorrent to give its 100 million users the option to pay with BTC and altcoins. Coingate serves 50,000 merchants and has processed hundreds of thousands of cryptocurrency payments, and Utrust just partnered with Payrexx and its 10,000 European merchants.

More integrations and partnerships between cryptocurrency payment processors and fiat payment processors are in the works and the market is expected to grow by 50% in the next two years.

In particular, Foton announced plans to attract 100 million users by 2020 and offer competitive features including its own stablecoin, fiat pairs, atomic swaps, a loan and escrow service, and a payment card with loyalty rewards and cash back.

So there is no doubt: millions of merchants all over the world accept cryptocurrencies, as do tens of thousands of websites.

Commercial Use

It has been estimated that some 20 million people worldwide own cryptocurrency. Most others have heard of bitcoin and many plan on adding it to their portfolio.

Square, a credit card payment processor serving merchants, employers and mobile payment users, is gradually out-competing Paypal while also increasing its profits through BTC sales. The majority of Square’s merchant customers have expressed interest in accepting bitcoin core and a 2017 Cambridge Centre for Alternative Finance study confirmed that 40% of consumers would, indeed, like to be able to make purchases with BTC.

Countries with weaker than average fiat currencies tend to favour the use of cryptos.

Turkey, Venezuela, Brazil, Australia and South Africa appear to have large numbers of cryptocurrency users. In fact, a whopping 80 percent of Australians would like to use cryptocurrencies for daily purchases.

Merchants in Eastern Europe and small western European towns seem more open toward adding bitcoin as a method of payment. Even before the 2017 cryptocurrency bull market, more than 10% of Eastern Europeans reported using cryptocurrency in place of fiat for everyday purchases.

Fees

There was a time when cash was king and financial institutions gave generous incentives to people who chose to put their hard-earned cash into institutional coffers.

Today, bank accounts, debit and credit cards, have fees associated with them — money that goes down the drain and provides no benefit.

There are debit and credit card fees, ATM fees, merchant fees, checking account fees, overdraft fees, paper fees, check fees, transfer fees, change fees, charge-back fees, foreign transaction fees, minimum balance fees, inactivity fees, false decline fees, et cetera, et cetera.

In comparison, popular cryptocurrency payment gateways like Bitpay and Coinpayments charge between 0.5% and 1% per transaction.

In most cases, a cryptocurrency account in the form of a digital wallet is entirely free and unless one chooses to invest in cryptocurrency hardware wallets or prepaid cards, other than the transaction fee, using cryptocurrency as money costs absolutely nothing.

International Use

Cryptocurrencies are a borderless means of exchange allowing for instant and cost-effective transactions across the world.

There is no waiting, no international fees and no limitations as to who can or cannot send funds to whom or when and where those funds can be accessed.

All that is needed is an internet-enabled device like a smartphone and someone without access to a banking institution is given an alternative solution with which they can pay bills, earn income, safe-keep their funds, make purchases and conduct business.

Using cryptocurrencies while travelling adds an extra layer of security and can be used as a remote source of emergency funds that can be accessed without an ID, a bank account, credit cards, a wire transfer or even a personal computer device.

No Charge Backs

Unfortunately, there are customers who make a purchase, receive the items they ordered and even use them only to cancel their payment. They can do this because fiat payments are not instant.

With cryptocurrencies, things are quite different.

Once a transaction has occurred, there is no turning back.

Funds ‘travel’ from one wallet to another, the transaction is recorded and it cannot be reversed. This is not to say that a customer cannot return an item and request a refund by communicating directly with the vendor. Of course, they can.

What they cannot do is place an order, pay for it, receive it and then get the sum they paid back on their account because of money back policies overseen by online payment processors and credit card companies.

Charge backs are meant to prevent fraud and yet they often accomplish the very opposite. In this instance, cryptocurrency works the same way as cash. After you’ve taken the item you paid for with cash, you can’t go back to the store with a damaged or used item, never mind empty-handed, and demand your money back.

E-commerce

Accepting cryptocurrency online has never been easier. Shopify and Etsy merchants can select to accept BTC, BCH, and altcoins. Woocommerce and Easy Digital Downloads vendors can use WordPress plugins like Mycryptocheckout for the purpose.

Shapeshift gives customers the choice to pay with dozens of cryptocurrencies. Shapeshift is integrated with cryptocurrency payment processors like Bitpay and Coingate, and cryptocurrency wallets like Coinomi and Keepkey.

Moreover, there is Purse.io, an online platform where users can buy items from Amazon with cryptocurrency and it is also integrated with Shapeshift, as are Magento and Openbazaar. Setting up cryptocurrency payments is super simple and quick and merchant transaction fees are 60-70%lower compared to fiat transaction fees.

Sensitive Data

Banks and credit institutions, as well as retailers and service providers, obtain and retain too much of their customers’ personal and financial information.

Details including our name, address, employers, social security number, net worth, assets, investments, account balances, credit score, credit line, and transaction history, along with everything we do and buy, who we associate with, when, where, etc. comprise our personal, professional and financial data sets. With traditional financial institutions and traditional fiat currency, we can no longer preserve our privacy.

Cryptocurrency transactions provide an alternative by limiting the amount of transaction data to mere numbers also known as cryptocurrency wallet addresses and transaction IDs confirming that a wallet-to-wallet transaction took place.

A cryptocurrency payment processor acting as a third party will typically require your name (and shipping address for the delivery of physical goods), but the rest of your information will remain private as long as you don’t connect your bank or credit card account and transact solely in BTC and altcoins.

Source news.bitcoin.com

Mainstream cryptocurrency adoption will come

Mainstream cryptocurrency adoption will come

There are more than 1,000 cryptocurrencies in existence, but almost all of them are held for speculation. How do we get people to spend these currencies? And, more importantly, how do we make them a medium of exchange that consumers can use in everyday life?

According to the paper — entitled “Cryptocurrencies: Overcoming Barriers to Trust and Adoption” — bitcoin and cryptocurrencies will hit the mainstream as a way of paying for goods and services within the next decade.

As Imperial College London professor William Knottenbelt put it:

“There’s a lot of scepticism over cryptocurrencies and how they could ever become a day-today payment system used by the man on the street. In this research we show that cryptocurrencies have already made significant headway towards fulfilling the criteria for becoming a widely accepted method of payment.”

The three criteria for mass adoption the researchers laid out are:

  • Store of value: allowing individuals to make intemporal choices on when to spend their purchasing power
  • Medium of exchange: facilitating the exchange of goods and services by eliminating the inefficiencies associated with a barter economy
  • Unit of account: acting as a measure of value in the economic system.

Adoption must be Easy

While this may sound callous, adoption should be easy…or at least easier.

Adopting a baby should be easier and if it were, more people would go through the process of adoption. The same rationale can be applied to cryptocurrency and cryptocurrency payments. Right now, regardless of what the expert developers and pro-crypto people believe, adoption cryptocurrency is too difficult.

That is just a fact. If it were so easy, then more businesses, institutions and individuals would have done it already.

Bitcoin is not obscure. Bitcoin is not unknown. Certainly, Bitcoin does not suffer from a lack of popularity. Even Jeff Sprecher, the CEO of the Intercontinental Exchange (ICE) and the Chairman of the New York Stock Exchange (NYSE) believes that Bitcoin has a bright future ahead as the according to Sprecher:

“Somehow Bitcoin has lived in a swamp and survived.”

That says a lot, and Sprecher is not the only CEO from the institutional finance world that recognizes the growing value of Bitcoin and other digital currencies.

In a nutshell, the value exists, the theoretical and applicable use cases exist too. But merging existing technologies into a universal product that can be easily integrated into or to replaces traditional payments infrastructure is not yet feasible.

In order to achieve mass adoption, and perhaps another bull run in 2019, greater efforts and attention must be paid to new protocols focused on facilitating super-fast, universal transactions.

It makes sense to assume that as more individuals use cryptocurrency for payments, the crypto community will transition from the casino-like speculation that thrives on hype and illusions of market cap grandeur to the development of products that can be easily applied in everyday life.

Real positive change will not come as a result of the name calling and criticism by one blockchain startup of another but from the collaboration, promotion, and support of projects that push for a real-world use case that is easily adopted.

A handful of fantastic projects are already on the path to delivering very useful solutions. The cryptocurrency space would benefit immensely from each developer supporting such projects.

Give Users an Initial Spending Opportunity to Understand Crypto

While early adopters might jump at the opportunity to become one of the first in a new economy, the average user has one question: What will I spend this on?

Crypto projects need to build products with real use cases, and this can be done by listening to what we, their consumers, actually want — especially in digital environments.

Businesses — tech companies, specifically — have access to a wealth of insight from their users. However, the big monopolies only care about and extract consumer data that they can sell to advertisers to make money, instead of learning how the users would like them to improve their experience.

Someone might be interested in spending crypto if an app, platform or service that I regularly use created new features that could only be unlocked with cryptocurrency.

In order to understand how these currencies benefit us, average consumers need something basic to spend these tokens on, and the virtual world is where these introductory opportunities await.

Create An Easy Way To Earn Crypto For Potential Use

Once there’s a digital good that people want to have (and they must pay for it with crypto), the next question is: “How do I get enough tokens to purchase it?”

Users can go to an exchange to trade fiat for crypto, but having a way to earn it without dipping into their pockets would be beneficial.

Digital environments easily lend themselves to creating simple ways for people to earn crypto that they can then use on the virtual goods they want.

Maybe some would consider completing an online task such as a survey for traditional fiat but would do that for instant cryptocurrency which they can later use to pay for a special future in their favourite app.

By simplifying access to crypto, more mainstream consumers will be able to begin thinking about using it.

Top countries where cryptocurrency is legal

Top countries where cryptocurrency is legal

Bitcoin (BTC) is considered to be the first cryptocurrency to be issued under the term of representing a decentralized blockchain-based digital asset.

Read more on What is Bitcoin?

Although this is the case, and Bitcoin is running over 110 billion dollars in market cap, BTC is still not widely regulated across all countries in the world in the same manner.

Even though many countries marked BTC as a legal entity, there are many parts of the worlds where Bitcoin trading is considered illegal.

usa bitcoin legality

 

United States of America Bitcoin Legality: Yes

Bitcoin got a green light from the United States, as trading this digital asset is not set as illegal by the law. The Securities and Exchange Commission found proof that Bitcoin does not represent a security but rather currency, and FinCEN deemed it as legal.

FinCEN has been following up with Bitcoin on legality matters since 2013, so there are no laws prohibiting the trading of Bitcoin in the United States of America.

european unuion bitcoin legal

The European Union Bitcoin Legality: Yes

The European Union as a whole hasn’t yet issued any specific regulations or laws that would prohibit Bitcoin from being traded within the states that belong to the European Union.

That is how trading Bitcoin is legal in EU, while some countries like Bulgaria, Cyprus, United Kingdom, Germany, Belgium, and more have issued their own regulations all in favour of the top currency in the market.

australia bitcoin legal

Australia Bitcoin Legality: Yes

Bitcoin is a perfectly legal entity in Australia. That means that all activities regarding Bitcoin are allowed and legal in Australia.

canada bitcoin legal

Canada Bitcoin Legality: Yes

Canada says “Yes” to Bitcoin as far as the law is concerned. According to them, Bitcoin like any other entity that allows trading.

That means that Bitcoin is being regulated the same way as any other investment in Canada. However, this country is concerned about the possibility of money laundering when it comes to using Bitcoin.

That is why all Canadian Bitcoin exchanges have to report their records and suspicious transfers.

The December 2018 G20 Summit Regulations

In early December, each G20 nation signed an acknowledgement of “necessary reform” due to the global economy’s “digitalization.” The document refers to “crypto-assets,” which may be cryptocurrencies. Therein, the G20 agreed to regulate such assets consistent with FATF standards.

“We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed.”

The United States has been the first country to take concrete action against the financing of terrorism with its report by the U.S. Treasury Office of Foreign Asset Control. The report discussed two Bitcoin wallet addresses and warned them and the financial community that those who were transacting may be subject to sanctions.

What is the FATF?

According to their website, the FATF acts as a financial police:

“The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Minister of its Member jurisdictions. The objectives of the FATF are able to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing, and other related threats to the integrity of the international financial system. The FATF is, therefore, a ‘policy-making body’ which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.”

 

What is a smart contract in the Ethereum blockchain?

What is a smart contract in the Ethereum blockchain?

smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.

Proponents of smart contracts claim that many kinds of contractual clauses may be made partially or fully self-executing, self-enforcing, or both. The aim of smart contracts is to provide security that is superior to traditional contract law and to reduce other transaction costs associated with contracting. Various cryptocurrencies have implemented types of smart contracts.

Smart contracts were first proposed by Nick Szabo, who coined the term.

With the present implementations, based on blockchains, “smart contract” is mostly used more specifically in the sense of general purpose computation that takes place on a blockchain or distributed ledger.

In this interpretation, used for example by the Ethereum Foundation or IBM, a smart contract is not necessarily related to the classical concept of a contract, but can be any kind of computer program.

In 2018, a US Senate report said: “While smart contracts might sound new, the concept is rooted in basic contract law. Usually, the judicial system adjudicates contractual disputes and enforces terms, but it is also common to have another arbitration method, especially for international transactions. With smart contracts, a program enforces the contract built into the code.”

Implementations

Byzantine fault tolerant algorithms allowed digital security through decentralization to form smart contracts. Additionally, the programming languages with various degrees of  Turing-completeness as a built-in feature of some blockchains make the creation of custom sophisticated logic possible.

Notable examples of implementation of smart contracts are:

  • Bitcoin also provides a Turing-incomplete Script language that allows the creation of custom smart contracts on top of Bitcoin like multisignature accounts, payment channels, escrows, time locks, atomic cross-chain trading, oracles, or multi-party lottery with no operator.
  • Ethereum implements a nearly Turing-complete language on its blockchain, a prominent smart contract framework.
  • RootStock (RSK) is a smart contract platform that is connected to the Bitcoin blockchain through sidechain technology. RSK is compatible with smart contracts created for Ethereum.
  • Ripple (Codius), smart contract development halted in 2015

Replicated titles and contract execution

Szabo proposes that smart contract infrastructure can be implemented by replicated asset registries and contract execution using cryptographic hash chains and Byzantine fault tolerant replication.  Askemos implemented this approach in 2002 using Scheme (later adding SQLite) as contract script language.

One proposal for using bitcoin for replicated asset registration and contract execution is called “colored coins”. Replicated titles for potentially arbitrary forms of property, along with replicated contract execution, are implemented in different projects.

As of 2015, UBS was experimenting with “smart bonds” that use the bitcoin blockchain in which payment streams could hypothetically be fully automated, creating a self-paying instrument.

smart contract

Security issues

A smart contract is “a computerized transaction protocol that executes the terms of a contract”. A blockchain-based smart contract is visible to all users of said blockchain. However, this leads to a situation where bugs, including security holes, are visible to all yet may not be quickly fixed.

Such an attack, difficult to fix quickly, was successfully executed on The DAO in June 2016, draining US$50 million in Ether while developers attempted to come to a solution that would gain consensus. The DAO program had a time delay in place before the hacker could remove the funds; a hard fork of the Ethereum software was done to claw back the funds from the attacker before the time limit expired.

Issues in Ethereum smart contracts, in particular, include ambiguities and easy-but-insecure constructs in its contract language Solidity, compiler bugs, Ethereum Virtual Machine bugs, attacks on the blockchain network, the immutability of bugs and that there is no central source documenting known vulnerabilities, attacks and problematic constructs.

What’s the Difference Between Bitcoin and Ethereum?

What’s the Difference Between Bitcoin and Ethereum?

The blockchain technology has been in involved in the most important news worldwide for the last 2 years. Even if some people haven’t heard of digital currencies or cryptocurrency yet, they sure have heard of Bitcoin. Not so many of them have heard about Etherium. “What is Ethereum?” you ask? Ethereum is another cryptocurrency and a platform, similar to Bitcoin, but still very different. In this article will explore the difference between Bitcoin and Ethereum.

With massive trading volumes and market capitalizations for some of the larger crypto-currencies rivalling that of some of the worlds largest corporations, the Ethereum vs Bitcoin is like the competition between Messi and Ronaldo or Federer vs Nadal. They are each special., but different. We will try to make some light in these very disputed topics, trying to showcase what makes Ethereum different and what are the differences between cryptocurrencies.

What is the difference between Bitcoin and Ethereum?

To discover the difference between bitcoin and Ethereum, we first need to explain and understand how and why each was created. How does Bitcoin work? How does Ethereum work? What is the value of Bitcoin and what is the value of Ethereum? The fight for cryptocurrency supremacy is disputed and we will once it for all try to put everything into a simple and understandable language so that even cryptocurrency newbies can fully understand what is the difference between Bitcoin and Ethereum.

Let’s start by explaining what is Bitcoin.

Bitcoin. What is Bitcoin?

The easiest way to define Bitcoin is to call it a “digital dollar.”

That’s really all it is — minus all the formal regulations that come with a bank (which is what makes it such a disruptive concept). It’s not a technology. It’s not a company. It’s your money, held in a digital form.

Read more on What is Bitcoin and how does Bitcoin work?

bitcoin vs ethereum

 

How can you use Bitcoin? Why do people buy Bitcoin?

Some people buy Bitcoin because they want to store their money somewhere other than a bank. That’s all good, but take care of where you store your Bitcoin and other cryptocurrencies and digital assets. This can be a sensitive topic and the security of the crypto world needs to be talked about. Here are some newbie cryptocurrency mistakes to avoid. Spoiler: Don’t store your cryptocurrency, Bitcoin, Ethereum, digital assets, digital tokens, crypto collectables on a cryptocurrency exchange, except for when you are trading, selling or exchanging it. Store crypto in a wallet! Also, a good idea is to research some cryptocurrency exchanges and get started from there.

Some buy Bitcoin as an investment, hoping that the price will jump (once more) within a short period of time or in some years time. Here is where you can see people for what they are. They all call themselves crypto investors, but they really divide into two categories: long-term cryptocurrency investors and day-traders (just like the ones on the stock market). Of course, both ways are and have methods to increase your funds, but it requires a lot of research. Unless this isn’t your job, making money out of cryptocurrency is either a stroke of complete luck or not happening.

Others purchase Bitcoin as a means of investing in companies that raise money through an ICO since equity in those companies cannot be purchased with traditional currency. You can only purchase tokens with Bitcoin or Ether, which is Ethereum’s cryptocurrency.

The ones participating in ICOs are the true crypto enthusiasts or some who want a fast penny. But the year of fast-growing cryptocurrencies was 2017, and it is not coming back. AS time passes, the only true cryptocurrency projects remain and advance in their development. The others are thrown away into the pit of oblivion.

Ethereum

Ethereum is another cryptocurrency, and many people see it as a potential threat to Bitcoin as the dominant coin in the market.

What makes Ethereum different from Bitcoin is its technology, not the fact that it’s yet another cryptocurrency. Ethereum’s coin value is referred to as “Ether,”. Ether, just like Bitcoin, it can be is bought and sold on cryptocurrency exchanges, and used by investors to buy into ICO opportunities. So this is how Ethereum is similar to Bitcoin.

bitcoin vs ethereum

 

Read more on What is Ethereum?

But what is the difference between Ethereum and Bitcoin?

The difference between Ethereum and Bitcoin is the fact that Bitcoin is nothing more than a currency, whereas Ethereum is a ledger technology (a platform) that companies are using to build new programs.

Both Bitcoin and Ethereum operate on what is called blockchain technology, however, the Ethereum blockchain is far more robust. If Bitcoin was version 1.0, Ethereum is 2.0, allowing for the building of decentralized applications to be built on top of it.

In a nutshell: The Ethereum blockchain is great for innovation.

Furthermore, there is heavy support behind Ethereum’s technology in what is called The Enterprise Ethereum Alliance.

bitcoin vs ethereum

This is a super-group of Fortune 500 companies that have all agreed to work together to learn and build upon Ethereum’s blockchain technology — otherwise referred to as “smart contract” technology. In this case, “smart contracts” mean that demanding business applications can automate extremely complex applications.

What has so many people excited about Ethereum’s technology is its potential to impact projects and processes across all industries. It’s by no means a perfect technology yet, but it has opened the door for a wide variety of unique innovations.

Here is where the value of Ethereum is visible. Having all the functionalities of an improved blockchain compared to the Bitcoin blockchain, Ethereum has and it’s setting the pace for future blockchain opportunities, and it does so by offering this technology innovation to anyone willing to work with it. Ethereum is an open-source blockchain and gives its users to create their own open-source applications, also known as Dapps.

What is a Cryptocurrency Exchange?

What is a Cryptocurrency Exchange?

What does Cryptocurrency Exchange mean?

A cryptocurrency exchange is any system that operates on the basis of trading cryptocurrencies with other assets. Like a traditional financial exchange, the cryptocurrency exchange’s core operation is to allow for the buying and selling of these digital assets, as well as others.

A cryptocurrency exchange is also known as a digital currency exchange (DCE).

Think about the ways that these new types of exchanges are different from traditional financial exchanges. Cryptocurrencies are inherently unstable in terms of value and sourcing. Cryptocurrencies like bitcoin have been associated with major disruptive events where bitcoin value changed dramatically over a short period of time, or where major exchanges went under due to theft, fraud or other problems.

Cryptocurrency exchanges have to build in protections from some of these events. However, these exchanges do serve as a key vehicle for liquid use of cryptocurrency assets.

Read more on What is cryptocurrency and why do we need it?

In other ways, cryptocurrency exchanges work just like traditional exchanges. On many of these platforms, cryptocurrency buyers and sellers can make limit orders or market orders, and the brokering process works like it would for any other kind of asset. The cryptocurrency exchange helps with the transaction and collects the fees. The difference is the underlying asset – Bitcoin or Ethereum or some other cryptocurrency that does not have the same valuation properties as a national currency.

There are several types of cryptocurrency exchanges:

“Traditional” Cryptocurrency Exchanges

These are the exchanges that are like the traditional stock exchanges where buyers and sellers trade based on the current market price of cryptocurrencies (with the exchange playing the middle-man). These type of trading platforms generally charge a fee for each transaction.

Some of these types of exchanges deal only in cryptocurrency, others allow users to trade fiat currencies like the U.S. dollar for cryptocurrencies like Bitcoin.

Coinbase’s GDAX (AKA Coinbase Pro) is an example of this type of exchange, as is Kraken. There are those run by third parties (they have a middle man who supports and correct some problems) and Decentralized Exchanges or DEXs that mimic traditional exchanges like IDEX (trading is based on smart contracts and not facilitated via a centralized third party’s software for the most part).

Generally, centralized exchanges will require a lot of info, but often allow fiat trading, and DEX exchanges won’t allow fiat trading, but require less information.

cryptocurrency exchange

Cryptocurrency Brokers

These are website-based exchanges that are like the currency exchange at an airport. They allow customers to buy and sell cryptocurrencies at a price set by the broker (generally at the market price plus a small premium).

Here the exchange is between the buyer or seller and the broker, not between a buyer and seller. Coinbase is an example of this type of exchange. Shapeshift provides a similar service as well (it lets you swap on a type of token for another).

This is the simplest solution for new users. You’ll generally pay slightly higher prices than you do on the exchanges due to the ease of use and the work the broker puts in.

Direct Trading Platforms

These platforms offer direct peer-to-peer trading between buyers and sellers. Direct trading platforms of this type don’t use a fixed market price.

Sellers set their own exchange rate and buyers either find sellers via the platform and preform an Over the Counter (OTC) Exchange, or they denote the rates they are willing to buy for and the platform matches buyers and sellers.

Many Decentralized Exchanges are of this type (although some are closer to being like traditional exchanges, which is why they are listed in the first category).

This type of exchange can be the only solution in some regions. In regions where trading is limited to direct exchange, but where trading isn’t smart contract based (like it is with DEX exchanges), make sure to do some extra research and ensure you are using a trusted platform and dealing with highly rated users.

Also, make sure to check market prices on Coinmarketcap, as you aren’t buying/selling at a fixed market price!

For an example of a decentralized peer-to-peer direct trading platform, see AirSwap.io (here the DEX facilitates direct swaps between users via smart contracts, and thus may require no information). For an example of a centralized peer-to-peer exchange that facilitates the exchange of fiat and crypto, see LocalBitcoins.com.

Cryptocurrency Funds

Funds are pools of professionally managed cryptocurrency assets which allows public buy and hold cryptocurrency via the fund. One such fund is GBTC.

Using a fund you can invest in cryptocurrency without having to purchase or store it directly. As a trade-off, you can’t use crypto in a fund as money, these are strictly for investment.

In almost every case a person new to crypto trading will want to use an exchange or broker. Newcomers will generally only want to use a direct trading platform when their options are limited (either limited by regulation or limited by coin choice). Meanwhile, while funds might be ideal to some, they tend to have a range of restrictions. GBTC and ETCG are the only funds open to the public for example.

Source cryptocurrencyfacts.com