With bitcoin and almost all crypto currencies popularity, More and more people are jumping into the crypto currency market.
Everybody wants to know how do I get bitcoins.
Well, this is done through a crypto currency exchange, there’s many things you need to know about a crypto currency exchange.
The currency exchanges are websites where you can buy sell or exchange crypto currency for other digital currency or traditional money like the US dollar or the euro.
For those of you who want to trade more professionally or want to have a bigger stake in crypto currency.
You will need to use an exchange that requires you to verify your identity to open an account.
If you want to make the occasional straightforward trade or by just a small amount you can also find platforms that don’t require you to verify your identification.
An exchange is where buyers and sellers do their trade.
The seller of the bitcoin or any other coin deposits bitcoins with the exchanges address.
He can then use his deposited bitcoin balance in exchange to sell his bitcoins or simply if he’s a buyer he can deposit US dollars for the exchange and then use the balance to buy bitcoins or any other coin.
Real exchanges are really just a medium between buyers and sellers where traders go to get their coins.
This is the only place or you can say virtually the only place where you can exchange fiat currency by using credit cards, debit cards or bank transfers to convert your fiat currency into your cryptocurrency.
Once you have cryptocurrency and you have the bitcoins then you can move it from exchange to exchange or wallet to wallet whatever you want to do privately.
But to get into that flow you need to go to an exchange to buy your initial bitcoins.
Of course, you can go to a private individual and he can transfer bitcoins in your wallet, I mean there are off market ways you can do this too.
The exchange in many cases it’s just a simple medium that matches buyers and sellers when the conditions for both the buyer and the seller are met so for instance in exchange you want to sell your bitcoin, you willing to sell for sixteen thousand five hundred dollars and it’s almost like ebay.
And lets says Number#65846 wants to sell bitcoin at sixteen thousand five hundred and you’re willing to buy at sixteen thousand five hundred, so you buy his bitcoins and after that he’s gone.
Now there are many different types of exchanges.
What you need to know is that there are essentially four types of cryptocurrency exchange.
Fiat – Crypto Exchanges
These are the exchanges that allow you to buy a cryptocurrency directly using your fiat currency (a government based currency such as the US dollar or the British Pound). These are most popular with those who aren’t familiar with the crypto market because it allows for easy access to the cryptocurrency of their choice without much hassle.
The issue with these exchanges is that they don’t seem to offer a choice of coins, so if all you want is bitcoin then they’re great but for a more peculiar altcoin.
Crypto – Crypto Exchanges
These exchanges will only allow you to buy one cryptocurrency using another. This means that you will need to buy a cryptocurrency on a fiat – crypto exchange and then send it to the wallet of the crypto – crypto exchange before exchanging for the coin you want to buy in the first place.
This is normally for more experienced traders who are actively trading between coins to profit quickly or alternatively want to buy smaller less known coins.
Peer-to-peer exchanges are those that simply match a buyer with a seller and will not take the other side of a trade. The most famous example is Localbitcoins, who will match a buyer with a number of sellers (if they’re available), which then gives the buyer the option to choose the best price of the selection.
They will normally offer an escrow service so that there is reduced counterparty risk for both buyer and seller.
Brokerages are not strictly exchanges because they do not allow you to own the underlying cryptocurrency. However, this does have its pluses because you don’t have to go through the hassle of setting up a wallet.
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