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November 11, 2020

What To Consider When Choosing A Bitcoin Trading Platform

Bitcoin (BTC) trading involves buying and selling the cryptocurrency as a way to earn high profit. The point of the game is to understand the market so that you can purchase more BTC when the price plummets and wait until there’s an opportunity to trade for a higher amount. While there’s no official Bitcoin trading platform, there are plenty of reliable exchanges online that offer this type of service. 

Here are the factors to consider when choosing a Bitcoin trading platform:

1. Type of Exchange

With the rising popularity of Bitcoin trading, lots of cryptocurrency exchanges have been established to cater to user demand. These websites allow you to buy, sell, or trade your BTC for other altcoins like Ethereum and Litecoin. You can even exchange your cryptocurrency for traditional fiat money like US dollars or Euros. 

Before you can start with your Bitcoin trading venture, you must know which type of exchange suits your preferences: 

  • Trading Platforms

    These channels connect buyers and sellers. They take a cut of the transaction as the processing fee. 

  • Direct Trading

    This type focuses on direct peer-to-peer trading where people all over the world can deal cryptocurrency. Moreover, these exchanges allow each seller to set their own exchange rate, so there’s no market price. 

  • Brokers

    With these websites, you can buy Bitcoins and other cryptocurrencies at a price set by the broker. This setup is similar to foreign exchange dealers.

Some of the popular Bitcoin trading platforms today are: 

  • Bitstamp

    It’s a Slovenia-based Bitcoin exchange website that allows for instant buy-sell orders for USD to BTC and vice versa. It has a limit orders trading feature where you can set a predetermined price to automate your buy and sell orders. 

  • Bitfinex

    Bitfinex has advanced tools to help you, such as margin trading, short selling, and liquidity swaps. The majority of their assets are kept in cold storage, with only 0.5 percent in wallets to facilitate seamless deposits and withdrawals. 

  • Coinbase

    The platform cemented its status as the one-stop solution for everything Bitcoin with its digital wallet that allows users to store, spend, and buy the cryptocurrency. It can also process BTC payments for business owners. 

  • Robinhood

    This organization has its roots as a fee-free stock brokerage, and now they’ve dipped their toes into the world of Bitcoins and other cryptocurrencies. It’s most notable feature is that it doesn’t charge users with a processing fee for trading. 

  • Bitcoin Code 

    Bitcoin Code is a platform that’s ideal for passive traders because of its automated trading feature. The app can detect profitable trading opportunities and make trades on your behalf.

2. Reliability

Since you’ll be investing your hard-earned money on Bitcoin trading, you should ensure that the platform you’ll be using has established its reputation as a reliable financial manager. Read up on user reviews on credible third-party industry websites to get an idea of its performance and functions. You can also post your questions on forums such as BitcoinTalk and Bitcoin on Reddit.

3. Security

The digital nature of Bitcoins makes it universal and convenient. However, the downside is that hackers can easily steal it if the trading platform doesn’t put up rigid security measures for storing their assets. With Bitcoin.com surpassing the 2 million downloads milestone, users and exchange operators have to be constantly vigilant about web security. 

The platform you choose must have, at the very least, two-factor authentication every time you log in to ensure that no one else but you has access to your funds. Check for protections and measures in place for lost passwords and devices. Recovery during these emergencies must be strict to avoid having your money fall into the wrong hands.

4. Processing Fees

Processing fees are the costs that you have to pay the platform for a specific action like buying, selling, or exchanging Bitcoins. Most trading platforms charge a percentage of the amount you’re dealing as payment for the transaction. 

 5. Payment Methods

There are two ways to earn Bitcoin. One is through mining, where you let your computer solve a complex mathematical equation in exchange for a few crypto coins. The other mode is by exchanging traditional money like US dollars or Euro to BTC. Most Bitcoin exchanges utilize the latter method since it’s more uncomplicated and straightforward. 

These are the four primary payment methods for buying BTC: 

  • Credit or Debit Card

    This is the most popular payment method. You type in your credit or debit card details, and the money will be sent instantaneously to your account in the trading platform. 

  • PayPal

    This online wallet is increasingly becoming more popular. It deals in fiat currencies and allows you to send and receive money anywhere in the world. You can connect your PayPal account to the Bitcoin exchange and transfer funds with just a few clicks or taps on the screen. 

  • Bank Transfer

    In some countries, cash continues to be the preferred payment method. You have to look for an exchange that allows for bank transfers where you just deposit the funds to the organization’s account and the money will be credited to your profile. 

  • Digital Coins 

    Online tokens are the first cryptocurrency exchange payment method. If you’re using a strictly crypto-only platform, you can quickly pay this way.

6. Registration and Verification Requirements

To aid in boosting the security of the websites and user authentication, most trading platforms require members to send a picture of their ID to confirm their identity. It’s a red flag if an exchange doesn’t have this step. While you may be concerned about anonymity, it’s crucial to note that this serves as protection for the users against scams and money laundering schemes.

7. Exchange Rate

Each trading platform will have different exchange rates. This factor can determine how much profit you can earn and the amount you’ll lose in the process. It’s vital to understand the website’s rates and how they calculate them so that you are aware of your money’s progress. 

Conclusion 

Bitcoin trading may be daunting for some because of its relative newness and the volatility of the cryptocurrency. However, these risks also allow you to ride the trend and earn high profits. Make sure to choose the best trading platform for your needs to maximize this opportunity. 

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